AKITA, Xtreme drilling merge to expand into US shale markets

After entering the Permian in early 2018, Calgary-based drilling company AKITA has made a major move to expand in the U.S. shale play. Through an agreement with Xtreme Drilling Corp., AKITA will shift its focus on major resource basins in the U.S. with a combined drilling rig fleet of 44 rigs. According to AKITA, the new combined entity “provides AKITA with immediate scale in the U.S. market.”

Karl Ruud, president and CEO of AKITA, said the transaction shows the company’s efforts to capitalize on the improving fundamentals in the U.S. land drilling market while the company continues to serve portions of the Canadian market.

Matt Porter, CEO of Xtreme, said the combined company will help Xtreme build-out its high-spec drilling rigs. “Together we will be better positioned to optimize existing assets and pursue new business opportunities,” he said.

The deal is valued at $209 million. AKITA is assuming $10 million in Xtreme debt and shareholders of Xtreme will receive common shares of AKITA and a payout of $0.59 in cash for each share of Xtreme common stock.

Xtreme considers its 850XE high-spec rigs to be some of the best in the shale industry. The rigs are better suited for extended reach laterals, have best in class power allowing operators to “push the throttle,” and allow for faster moves from well to well. In early 2018, the 850XE rigs were running at a $27,500 day rate. Other super spec rigs at the time were running for $20,000 per day but required roughly two more days to complete a drilling project. For 2018, Xteme’s rigs are already 90 percent utilized or contracted out through the rest of the year.